Oil prices up on weaker dollar, but supply glut caps gain

Paterniano Del Favero
Giugno 28, 2017

The investment bank says WTI will average just $42 in the fourth quarter of next year.

"Exchange data showed that speculators had cut their net long positions in WTI and Brent to its lowest level in 10 months last week", ANZ said in a note.

Most oil companies are now adjusting to "lower for longer." "Just as a floor appears to be coming in near $40, I think there is also a ceiling in the $50-55 area because higher prices encourage more USA production and exploration". "Oil is still extremely vulnerable to a serious nosedive as we're just not seeing what we need to see". "This is much more a story of sentiment weighing on the markets".

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In the week to June 20, investors in US crude futures and options increased their short positions, or bets against rising prices.

Copper's price has risen in response to a retreat in the dollar from its recent peaks and evidence of tightening supply. The bullish bets kept rising even as prices got stuck.

An oil pumpjack works at dawn in the Permian Basin oil field on January 20, 2016 in the oil town of Andrews, Texas. "We're looking to make a run at the 40 dollar market".

"A bottom in the oil price is likely near", said Citi, pointing out that long positions for both oil benchmarks almost January 2016 levels, when oil bottomed.

News from other markets show, an increase of 63 cents to $15.42 was observed in shares of Home Capital Group. It is too early to tell, but perhaps crude has stabilized, which could convince some investors that there is little room left on the downside.

Crude oil prices may be falling, but that hasn't been enough to stop the resurgence in the USA shale oil industry. "There seems to be very low conviction in the market that there really will be any inventory drawdown in the second half of the year", said Bjarne Schieldrop, chief commodities analyst at SEB AB.

The advance came after WTI and Brent both settled higher Monday (http://www.marketwatch.com/story/oil-prices-up-1-rising-for-third-session-in-a-row-2017-06-26), helped by forecasts for a weather-related weekly decline in US crude supplies, despite ongoing pressure from expectations of further growth in USA output.

Libyan oil executives are projecting that their production will reach 1mbpd by the end of July, a level not seen in four years. Front-month prices lost 3.9 per cent last week. Supplies have already fallen for two weeks in a row.

However, Gartman went on to add that the short-term is entirely different from what will happen to oil in 2018 and 2019.

Essar Oil is engaged in the exploration and production of oil and natural gas, refining of crude oil, and marketing of petroleum products.

The US Treasury yield curve flattened to nearly 10-year lows last Wednesday as investors evaluated the impact of hawkish Federal Reserve policy on the economy even as inflation measures are deteriorating.

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